Blogged Arteries provides the Latest Member News from the Texas Medical Association, America's Largest State Medical Society

Nov 9, 2015

Health Insurers’ Narrow Networks Putting Squeeze on Patients

Health insurance companies are sharply limiting the number of physicians and hospitals they include in their networks as a tool to limit how much they have to pay in covered benefits. Narrow networks are booming in plans sold both through employer-sponsored insurance and on the Affordable Care Act (ACA) marketplace exchanges.

These moves leave patients out in the cold, and squeezed for the costs of health care the plans aren’t covering. The popular news media and scientific literature have been filled with stories lately about narrow networks. Here’s a roundup.

“We found this practice among multiple states and issuers,” the authors wrote. “This likely violates network adequacy requirements, raising concerns regarding patient access to specialty care. Such plans precipitate high out-of-pocket costs and may lead to adverse selection (i.e., sicker individuals choosing plans with broader networks), which is similar to concerns over restrictive drug formularies.”

Rheumatologists, endocrinologists, and psychiatrists were the specialists most often missing from the plans.

Texas Leads in “X-small” ACA Networks

Texas has more “x-small” networks (45 percent) on the ACA exchange than any other state in the network. That’s what the Leonard Davis Institute of Health Economics (LDI) at the University of Pennsylvania found. (“State Variation in Narrow Networks on the ACA Marketplaces,” published by the Robert Wood Johnson Foundation, August 2015.) Those super-shrunken networks offer access to 10 percent or fewer of the physicians in a rating area.

This study looked at plans issued by 267 carriers across 355 networks in all 50 states. It used “t-shirt size” ratings of x-small (less than 10 percent), small (10 percent-25 percent), medium (25 percent-40 percent), large (40 percent-60 percent), and x-large (more than 60 percent). The variation was extensive. Some states, such as Delaware, Kansas, and North Dakota, have mostly large or x-large networks. Others don’t at all.

Here are the states with the most x-small or small networks:

Georgia – 83 percent

Florida – 79 percent

Oklahoma – 78 percent

California – 75 percent

Texas – 73 percent

Arizona – 73 percent

In an earlier study, the authors at the Davis Institute found that 41 percent of silver plans on the ACA exchanges were x-small or small.

“Across the country, close to half of the 2015 networks that consumers can choose from are narrowed; in the largest cities, almost two-thirds of the networks are narrowed,” the report states.

The report defines a “narrow” network as having 70 percent or fewer of local hospitals participating. An “ultra-narrow” network has 30 percent or fewer participating.

“Many consumers, however, do not appear to understand the choices available to them or the impact of those choices (especially limits on access to care),” McKinsey found. “In our consumer survey, 44 percent of those who bought an ACA plan for the first time this year reported that they did not know the network configuration associated with their plan.”

That, HealthPocket explains, means “the plans will not cover the costs except in the case of a medical emergency or if a prior authorization from the plan had been formally submitted and then approved by the health plan.”

Narrow Networks Forcing Patients to the ED

Because of narrow networks, a survey of emergency department doctors found, patients are showing up sicker in the emergency department. Also, emergency physicians are finding fewer primary care doctors and specialists to whom they can refer patients for follow-up. (“Insurance Industry Drives Patients to Sacrifice Necessary Medical Care,” published by American College of Emergency Physicians [ACEP], Oct. 26, 2015.)

Specifically, the national study of emergency physicians found:

73 percent of the doctors see more Medicaid patients because insurance companies don’t provide enough primary care or specialty physicians for their patients.

65 percent see more patients in the emergency department, in large part because health insurance companies don’t provide enough primary care physicians to support the community.

60 percent have difficulty finding specialists for their patients, because of narrow networks.

More than 80 percent treat patients who said they had difficulty finding specialists to care for them because health plans have narrow networks.

“This is a scary environment for patients,” said Jay Kaplan, MD, president of ACEP. “The insurance companies are shifting costs onto patients and medical providers as they attempt to increase their bottom lines, and this threatens the foundation of our nation’s medical care system.”

It didn’t work. The news media saw right through it and reported this comment from TMA President Tom Garcia, MD:

This so-called report is nothing more than a desperate smoke screen to divert attention from the real problem. The health insurance industry games the system to keep more of patients’ premium dollars by forcing patients to seek care out of network. Then they have the gall to criticize what some doctors’ bill for that care.

“Insurers want your local pathologist in the network only for inpatient hospital services but not for your outpatient services — even when the pathologist wants to be in your network for both,” Dr. Hinchey explained. “The insurance company ultimately decides who will be in or out of your network. Essentially the insurers are saying to the physicians: We want you some of the time but not all the time.”

Inadequate and limited physician networks that insurers sell today are leaving patients with unpaid bills. Unfortunately, Texas consumers are learning the limits of the coverage they bought just when most need coverage, especially in emergencies. The consumer is no longer satisfied with the not-very-well-explained, varying levels of savings that insurance networks create, especially if that means a greater financial burden in emergencies. Yet, despite network shortcomings, consumers do not want to be left without the choice of plans that offer network benefits.